What? Happy New Year? But that was months ago, even Easter has come and gone. Indeed, but 6th April is the start of the new tax year, so what are your Financial Resolutions? Maybe you haven’t thought about it yourself, so here a few for you to think about:
- Use your allowances – you have annual allowances galore –personal income tax allowance, capital gains tax allowance, annual gift exemption for Inheritance Tax. You have annual allowances for investing in Pension and ISA, but also Venture Capital Trusts and Enterprise Investment Schemes. All potential tax breaks that if not used, are lost forever.
- Check your interest rate (savings) – the savings account or ISA you opened last year may have had an attractive rate at the time, but now the introductory bonus may have expired and your cash may be sitting an account earning next to nothing. There is an astonishing £296 billion in Cash ISA accounts earning an average of 0.5% p.a. So if you have £50,000 in your cash ISA, you may earn £250 interest. Could be worse – some accounts are paying 0.1%, meaning £50 for the year. So check what you are actually earning – don’t wait for next year’s statement to discover the unfortunate truth. Now that the first £1000 p.a. of interest is tax free, for most people there is no advantage of a cash ISA over an ordinary bank account. Perhaps consider transferring to a Stocks and Shares ISA with an attractive yield.
- Check your interest rate (borrowings) – with interest rates at an all-time low and mortgage rates to match, you should not be paying more than 3% p.a. for your mortgage, loan or credit card, but the average mortgage rate being charged is closer to 5%, loans are routinely charged at around 10% and despite 0% deals being available on credit cards, the average rate is around 18% p.a.
All this is before we come to the changes announced in the recent budget but also changes announced in previous budgets taking effect on 6th April. The UK Tax Code is constantly evolving. The Financial Services business moves to keep up. Achieving your personal objectives in the most tax efficient manner possible, all within your personal risk profile and making full use of all allowances and keeping up to date with all legislative changes, is a big job .
Last resolution – have a financial health check with a suitably qualified and experienced Chartered Financial Planner. James and George Collie Financial Management have a group of seasoned professionals who have expertise in various areas of personal financial planning. A small investment of your time with one of our team could reap huge rewards.